Don’t miss CoinDesk’s Consensus 2022, the must-attend crypto and blockchain festival experience of the year, June 9-12 in Austin, TX.
Good Morning. Here’s what happens:
Prices: Most cryptos fall as investors await the likely decision by the U.S. Federal Reserve to hike interest rates by half a point.
Insights: Minnows showing their commitment to Bitcoin.
Technician Opinion: BTC threatens collapse as price momentum slows.
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Prices
Bitcoin (BTC): $37,841 -2%
Ether (ETH): $2,796 -2.5%
Biggest Winners
Biggest Loser
Bitcoin, other cryptos drop
Bitcoin and other cryptos continue their spiral of the past five days as investors await the worst-kept secret of recent U.S. monetary policy, a half-point rate hike by the Federal Reserve.
The largest cryptocurrency by market cap recently traded around $37,800, down over 2% in the last 24 hours. Ether, the second largest crypto by market cap, changed hands around $2,800, similarly strong over the same period. Most other major cryptos were down, although not by much. SOL, ADA and AVAX were all down more than a percentage point recently. CRO and TRX are each up about 5%, and ALGO is up nearly 6% each day after announcing it would become FIFA’s official blockchain platform.
“The macro issues, whether it’s the Ukraine war, global supply chain issues and inflation affecting every other country, are driving the Fed to tighten policy, and at times like these these risky assets generally don’t do well,” Kapril said Rathi , co-founder and CEO of digital asset trading platform CrossTower, to CoinDesk TV’s “First Mover” program. “One can argue that crypto falls pretty much in the same category as technology in terms of risk. We are seeing macro pressures on technology and cryptos at the same time.”
The story goes on
The Federal Reserve was widely expected to adopt a more restrictive approach to taming inflation, which has hit a 40-year high and threatens to rise further amid continued Russian aggression in neighboring Ukraine. The conflict has sent energy prices skyrocketing as many countries seek alternatives to Russian energy and supply chains suffer continued delays. The price of Brent crude, a widely watched benchmark for energy markets, has fallen slightly since Monday but was still trading at around $105 a barrel, up about 40% year-to-date.
In a report, Arcane Research noted that futures premiums remained historically low, “signaling continued pessimism from active market participants,” and that the Fear and Greed Index returned “Fear” or “Extreme Fear” for the fourth straight year, its longest registered period of fearful market sentiment this year.
Rathi struck a cautiously bullish tone on bitcoin pricing throughout the year. “In the next six to nine months, we will see that bitcoin will play an important role as countries deal with inflation, so I expect the market to recover.”
markets
S&P 500: 4,175 +0.4%
DJIA: 33,128 +0.2%
Nasdaq: 12,563 +0.2%
Gold: $1,867 +0.2%
insights
The Condemnation of Bitcoin Minnows
Bitcoin opened the week in the red with no relief in Asia and support hitting the $37,000 mark.
With the market remaining rangebound and not engaging in aggressive upward moves, Glassnode noted in a recent report that the latest “long-term holders” (defined as those who bought ahead of Bitcoin’s all-time high in October 2021) “are looking into the abyss of holding unprofitable positions” and preparing to capitulate and sell as their longer-held peers are already doing.
“The current market structure for bitcoin remains in an extremely delicate balance, with short-term price action and network profitability declining while long-term trends remain constructive. Capitulation from long-term holders appears to be continuing,” Glassnode wrote.
(glass knot)
In previous reports, Glassnode has noted that there is a major redistribution in crypto, with long-term holders panic-selling to new entrants.
We dubbed this cohort the minnows as these powerful but small fish bought crypto from large whales based on their belief in the asset class.
(glass knot)
And these minnows keep growing and multiplying. Despite this, the last month has been comparatively dull and compressed for the markets, the supply of wallets holding 0.1-10 BTC has continued to increase to the point where they are holding 2.5 million Bitcoin combined.
There is still a long way to go before “flip”. Glassnode believes this trend could reverse if minnows exceed their pain tolerance. After all, Glassnode points to $46,910 as the entry point for most of these short-term holders, giving the average coin held by a minnow an unrealized loss of -17.9%.
The question is, when will these short-term holders capitulate? Many of the long-term whales are professional investors or funds that can afford to lose, while minnows are retail investors. Long-term investors are also convinced of the asset class; therefore they invest. But they also have an income statement to release to their fund subscribers at the end of the month, and those capital allocators won’t like seeing a lot of red.
Small investors, on the other hand, are usually based purely on conviction and ideology. If Bitcoin continues to stay below $46,000 where many of them entered, it will be interesting to see how strong their convictions are and how long they last.
Recording of the technician
Bitcoin remains stuck below $40K resistance, support at $30K-$32K
Bitcoin daily price chart shows support/resistance with RSI on the bottom. (Damanick Dantes/CoinDesk, TradingView)
Bitcoin (BTC) continues to hold support above $37,500 but could face higher volatility in the coming days.
The cryptocurrency has been roughly flat for the past 24 hours and for the past week. This indicates indecisiveness among traders – a common theme so far this year.
Momentum signals have weakened on daily, weekly, and monthly charts, increasing the likelihood of a price drop. Lower support is seen around $30,000-$32,000, which could stabilize pullbacks in the near-term.
However, other technical indicators are neutral, which means that intraday buying could be short-lived. There is a strong resistance at $46,700 which could limit upsides similar to late March.
The Relative Strength Index (RSI) on the daily chart has remained below 50 (a neutral level) for the past month. The last time the RSI saw low levels was this past November and December, which preceded a dip below $46,000.
For now, buyers have failed to hold consecutive weekly closes above $40,000, which is the midpoint of a three-month price range.
Important events
Marathon Digital’s first quarter 2022 results
9:30 HKT/SGT (1:30 UTC): Australia Home Loans (March)
9:30 am HKT/SGT (1:30 am UTC): Australia’s Home Investment Lending (March)
5pm HKT/SGT (9am UTC): Eurostat Retail Sales (MoM/March)
CoinDesk TV
In case you missed it, here’s the latest episode of “First Mover” on CoinDesk TV:
Fed Rate Hike Meeting For May Begins Today, Wikipedia Editors and Crypto Critics on Web 3 and More
Wikipedia editor Molly White detailed crypto-related crimes and how she convinced the Wikipedia organization to stop accepting crypto donations. Also, CrossTower’s Kapil Rathi provided a crypto market analysis and Everstake’s Sergey Vasylchuk discussed how crypto can help save Ukraine’s UNESCO World Heritage Sites.
headlines
Andreessen Horowitz Pledges $500M to Indian Startups: Report: The move comes as more VCs target India’s burgeoning startup ecosystem.
Riot Blockchain Sells Almost Half of Bitcoin Production in April: The company raised $10 million with the sale of 250 bitcoins.
‘Smart Money’ wallets unload APE and top up aSTETH, Nansen Data suggests ‘Otherdeed for Otherside’ NFTs have seen the most activity over the past 24 hours, according to the on-chain analytics firm.
(Crypto) action! Indie Movie Studio Raised $10M in Bitcoin for Shares Last October: Angel Studios’ October 2021 fundraiser included Uncorrelated Ventures and Gigafund, the VC hosted by Elon Musk.
What a mining moratorium could really mean for New York’s crypto industry: The state’s proposed two-year ban is fast approaching reality, and experts are warning of its potentially chilling effect.
longer reading
Otherside and the Future of NFT Consolidation: After Its Messy Metaverse Land Sale, Yuga Labs Says It’s Outgrown Ethereum. source surprise.
Today’s Crypto Explainer: What Does It Mean To Burn Crypto?
Other Voices: The New Way to Get a Tax Break: NFT and Crypto Donations (The Wall Street Journal)
Said and heard
“That [European Union] is not ready for a gas embargo, but imposed a ban on Russian coal after the massacre in the Ukrainian city of Bucha. And the high probability of an oil deal underscores how much the war in Ukraine has forced Europe to reconsider its dependence on Russian energy. In 2020, the bloc imported about 35% of its oil, 40% of its natural gas and just under 20% of its coal from Russia, according to the EU Statistics Office.” (Washington Post) … “Coronavirus cases are rising again in South Africa, and experts from the public Healthcare professionals are watching the situation, eager to know what’s driving the surge, what it says about immunity to previous infections, and what the impact is globally.” (The New York Times)… “Fees have risen so dramatically because Bitcoin is a highly competitive market for transaction fees that fund network security and increasing demand has made transactions more expensive. The last time Bitcoin fees for micropayments were low enough was in June 2015, when the cost of a simple shipment topped 5 cents. Since then, they haven’t looked back. Even in the deep doldrums of the 2019 bear market, when the bitcoin (BTC) currency was trading as low as $3,000, fees were consistently above 10 cents.” (CoinDesk columnist David Z. Morris)
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